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Monday, November 3, 2014

Congress Makes History: This Is a Big Deal … Congress Has Cut Spending Two Consecutive Years

From The Center for Vision & Values, Grove City College

By Dr. Paul G. Kengor

Editor’s note: A version of this article first appeared in USA Today.

I recently attended a political event where a Republican congressman
was making a re-election pitch. It was the usual stump speech. But one
thing he said especially struck me. “This Congress has cut spending—yes,
actually cut spending—each of the last two years,” he asserted. “And how rare is that?”

Well, it would be extremely rare. So rare, in fact, that I frankly
didn’t believe the man. I made a mental note to check the data when I
got home.

I delayed doing that. My incredulity got the best of me. Surely, the
congressman was exaggerating. It’s the political season, after all. I
moved on.

That was several weeks ago. Then, however, came a moment that
prompted me to follow up. As a professor who teaches Comparative
Politics every fall semester, I was at the spot in my course where I
review the tax-and-spending patterns of the U.S. federal government.
Each time, I show students the one constant in the political universe:
Our federal government never cuts spending. It simply doesn’t happen. I
stroll into class with data from OMB (Office of Management and Budget)
and CBO (Congressional Budget Office) illustrating just that.

This data is simple to access. It’s as easy as Googling “historical tables deficit.” Two sources pop up: OMB historical tables and CBO historical tables.
They are the go-to sources for data on deficits, debt, revenue, and
government expenditures. To keep things simple here, I’ll cite OMB data, which is published in an easily readable link
titled, “Summary of Receipts, Outlays, and Surpluses or Deficits:
1789-2016.” This table provides the official record of federal spending
since the founding of the republic.

Digging into that data, a pattern quickly strikes the reader: Once
upon a time in America, expenditures and revenue both moved up and down.
Congress was capable of cutting spending in years when revenue
declined—the sort of thing you do in your home or business. Then came a
watershed year when such common sense vanished, supplanted by a form of
fiscal irresponsibility and suicide. Beginning in 1965, the start of
LBJ’s Great Society, something historically deviant commenced: Spending
increased every single year, non-stop, consistently, with total
disregard for revenue. This meant chronic deficits and debt.

Starting in 1965, there was an unceasing upward trajectory in federal
spending. Notably, revenue did not do the same. During recessions and
economic downturns, tax revenue dips. There were seven occasions between
1965 and the start of the Obama administration that witnessed annual
revenue declines—but never spending declines.

The responsible thing for Congress would have been to cut spending
during those declines in revenue. That, however, didn’t happen. Politics
being what it is, the spending continued its steady annual rise, as did
our national debt.

At the start of the Great Society, revenue and expenditures were
nearly equal, with expenditures only slightly higher, leaving a
manageable deficit of $1.4 billion. By 2009, however, annual
expenditures ($3.5 trillion) had far outpaced annual revenue ($2.1
trillion), leaving a record deficit of $1.4-plus trillion.

Significantly, the biggest one-year drop in revenue was from 2008-9,
when it declined from $2.5 trillion to $2.1 trillion. But rather than
cut spending, the government exploded it. President Obama and the
Democratic Congress responded with an $800-billion “stimulus” package in
2009 (i.e., more spending). That further mushroomed the record deficits/debt
we faced. It was fiscally disastrous. We went from a record 2008
deficit of $458 billion to a record 2009 deficit of $1.41 trillion.

And so, I showed my students, that’s the lesson: The federal
government does not cut spending, regardless of how much money it has.

That is, until now—which brings me back to that congressman. I
finally checked on his claims. I was shocked. He was correct: Congress
cut spending from 2011-13. It was reduced from $3.60 trillion in 2011 to
$3.53 trillion in 2012 to $3.45 trillion in 2013. The reductions are
far from earthshattering, but, for the federal government, this is
pretty much an earthquake.

This is the first time since 1953-55 that spending was cut in consecutive years—in literally over a half century.

Wow. I honestly didn’t think I’d ever live to see it. I’m 47 years
old, and this is the first time in my lifetime that a Congress has
consecutively cut spending. For years, I’ve lectured, commented, and
written about how Washington literally does not cut spending. I need to
amend that. History has been made.

And yet, Congress doesn’t seem to be getting much credit for this.
Sure, the Republicans will hold Congress. But when I listen to
conservative talk-radio or talk to Republicans or read conservative
websites, they constantly bash their own Republican Congress as
feckless, useless, as no better than President Obama and the Democrats.
They eviscerate John Boehner as a wimp and a stooge. They demand that “Reagan conservatives”
be elected to Congress. Well, I have news for them: Ronald Reagan never
saw a reduction in federal spending—not once in eight years. Neither
did George W. Bush. For that matter, neither has any modern Democrat.
Even the Clinton-Gingrich partnership, which eliminated the deficit,
never actually cut spending in any year throughout the 1990s (though the
rate of growth of spending was cut, which helped reduce the deficit).
Only the current Congress has done that. I’m really surprised.

Alas, there’s even more good news in this. This means that the record
deficit that threatened to bury this nation four years ago, on the
heels of the Pelosi Congress, has been cut by more than half. It has
been reduced dramatically, from $1.4 trillion in 2009 to $500 billion in
2014. That’s still high, but it’s a remarkable improvement.

If you want the answer for how that happened, it’s simple: your Congress has finally managed to cut spending. That is a big deal.

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